Apple strikes App Store deal with small developers as it waits for ‘Fortnite’ ruling

Aug 26 (Reuters) – Apple Inc (AAPL.O) on Thursday agreed to loosen App Store restrictions on small developers and close a deal in a class action lawsuit, as the iPhone maker is based on a ruling by the same judge in a separate App Store is waiting for a dispute between the developer behind “Fortnite”.

The deal includes changes to the way all developers can communicate with customers, an issue highlighted by the judge herself in the Fortnite case.

But Apple has kept the vast majority of App Store business practices challenged in courts and lawmakers intact. Instead, it had just $ 100 million, a small sum for a company worth over $ 2.4 trillion, and a series of email marketing restrictions that legal experts said they themselves did In a previous US Supreme Court case that allows companies to forbid themselves, their business partners could find it difficult to defend themselves from directing customers to alternative payment methods.

A group of smaller software developers filed the lawsuit in 2019, alleging Apple violated antitrust laws with practices such as charging commissions of up to 30%. The Cupertino, Calif.-Based company said it had reached a proposed settlement that covers U.S. developers who have made $ 1 million a year or less, under which developers are abandoning all claims that Apple’s commissions were too high .

Apple is waiting for a decision in the much higher-ranking antitrust proceedings of Fortnite inventor Epic Games. The settlement proposed on Thursday requires the approval of Judge Yvonne Gonzalez Rogers of the U.S. District Court for the Northern District of California, who is expected to make a decision in the Epic case.

As part of Thursday’s deal, Apple announced it would make changes to the App Store, including a three-year extension made last year that will cut commissions for smaller developers to 15%.

Developers have long been able to use other payment methods outside of their apps to avoid commissions to Apple, and some, like Netflix Inc (NFLX.O), eschew Apple’s in-app payment system.

But Apple maintains strict rules against developers who use contact information from customers who sign up through the App Store to later inform those customers about alternative payment methods, which are often cheaper because they don’t charge Apple.

Smaller developers unfamiliar with Netflix have long complained that Apple’s restrictions prevent them from establishing direct billing relationships with customers.

During the Epic-Apple trial in May, Gonzalez Rogers had criticized Apple’s rules even though Epic hadn’t made them the core of his cause.

“Apple hides this information in a way that is not directly reflected to the consumer, appears to be anti-competitive,” she said.

Apple said the changes will apply to all developers worldwide, not just the smaller developer class in the United States who will be directly affected by the deal. The company will also set up a $ 100 million support fund for small developers.

Steve Berman, managing partner of Hagens Berman, who represented the developers on the case, said the comparison would bring “meaningful improvements”.

Reporting by Aishwarya Nair and Kanishka Singh in Bengaluru and Stephen Nellis in San Francisco; Editing by Shri Navratnam and Leslie Adler

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